It’s very easy to chuck retirement planning into the too-hard basket, especially when you’re still young. But trust me – it’s much, much easier (and smarter) to get on top of things early so you can start preparing for the most comfortable and enriching retirement you can imagine.
I reckon the easiest way to get started is to figure out where you’re at right now according to your life stage. From there, you can begin listing out all the must-dos and get cracking on building up that nest egg.
So here’s your no-nonsense guide to getting retirement-ready, whether you’re just starting out in your 30s or edging closer to the finish line.
In your 30s: Set your foundations
Your 30s are when you should be really starting to get serious about money. You’ve probably settled into your career, or you might be thinking about buying a home or starting a family – life is busy, and money is flying out the door faster than you can stick it in the bank.
But here’s the thing: compound interest loves time, and right now you’ve got heaps of it. The earlier you start adding to your super and investments, the more those contributions will grow exponentially.
Make sure you consolidate any old super accounts so you’re not paying multiple fees, and choose a fund with some seriously competitive performance and low costs. If you can, throw in a little bit extra through salary sacrifice or personal contributions. Even a small boost now can turn into a big win down the track.
Most importantly, clear out any high-interest debts like credit cards first, then focus on building up an emergency fund so life’s little surprises don’t derail your future.
In your 40s: Dial up the discipline
In your 40s, retirement gets a bit more real. By now you’re probably earning more, but you’re spending more too – especially if you’ve got kids. The trick is to strike a balance: enjoy today, but make sure future-you isn’t left short.
Aim to max out your super contributions. By topping up your super even just a smidge, you can shave years off your working life. Don’t believe me? Salary-sacrificing just $50 extra a week at this age could put tens of thousands of dollars extra into your nest egg over the next couple of decades.
This is also the life stage to take control of your debts. Aim to have your home loan structured better, perhaps with an offset account, so you can knock it down faster. Every extra dollar paid off your mortgage is interest saved and equity earned – your future self will thank you.
In your 50s: Pedal to the metal
Your 50s are crunch time. Retirement isn’t that far away, but you still have enough time to make a big impact. By now, the kids are probably grown (or getting close), which should free up cash flow to really supercharge your savings.
Think about catch-up concessional contributions for your super. From age 50 onwards, you should be actively planning to maximise your super contributions up to the concessional limits. If your mortgage is about to be paid off, divert repayments into your super fund.
This is also the time to take stock of your investment strategy. It might mean shifting to more conservative options to protect the wealth you’ve already built, or speaking to a financial advisor to see if you’re on track for your retirement goals.
In your 60s and beyond: Fine-tune and strategise
The golden years. Retirement moves from abstract to imminent reality. But don’t panic! If you’ve planned well, this is the time to fine-tune your retirement strategy, rather than having to start from scratch.
First, figure out how much you’ll need to retire comfortably. The latest ASFA benchmarks suggest a couple will need something approaching $75,000 every year for a comfortable retirement, or around $52,000 for singles. Know your numbers – and how your super, pension and investments will work together.
At this stage, protecting your capital is probably your biggest must-do. So think about whether you need to move your super into lower-risk assets, but make sure you’ve got the balance right between capital protection and growth – you could be retired for another 25 years or more!
Find your own balance
Everyone’s retirement goals are different, so get a clear picture of yours before deciding on the big issues. Do you dream about travelling the world or downsizing to the coast, or do you just want to enjoy your current lifestyle without stressing about money?
No matter your age, the key to retirement planning is knowing what you want and sticking to a strategy. Start today – wherever you’re at – because the one thing we all know for sure is that you can’t buy more time. But you can absolutely make the most of what you’ve got.
